Tuesday, April 7, 2015

COLOMBO, April 6 (Reuters) - Sri Lanka's government borrowing has risen sharply since January, central bank data showed on Monday, as the new government seeks to woo voters and strengthen its grip on power at a parliamentary election.

The government has sharply increased state sector wages and lowered duties on key commodities, putting pressure on government finances and pushing yields on Treasury bills up by between 76 to 82 basis points (bps) since Jan. 7.

Having won a presidential election on Jan. 8, President Maithripala Sirisena appointed Ranil Wickramasinghe as prime minister, though he lacks a majority in the 225-seat parliament.

Sirisena has pledged to hold parliamentary elections, which could take place before the end of June - a year ahead of schedule.

The total outstanding stock of T-bills and T-bonds rose by 216.6 billion rupees ($1.63 billion) in the first three months of this year - equivalent to around 90 percent of total net borrowing through T-bills and T-bonds in 2014.

Total outstanding dollar-denominated Sri Lanka Development Bonds (SLDB) jumped 18 percent in the first three months with the government borrowing a net 70 billion rupees worth SLDBs.

Government spokesman Rajitha Senaratne told Reuters on Friday that the government needs to borrow more to pay contractors who took on debt in order to complete ambitious infrastructure projects during the previous administration's tenure.

Sirisena has ordered a review of all infrastructure projects under the previous government, alleging corruption.

Market analysts said the pressure on government finances was also due to a delay in a planned sovereign bond issue of up to $1.5 billion.

Roadshows to test investor appetite found some fund managers were reluctant to buy the bond before the election, according to analysts, though there were still some who favoured a eurobond issue this month.

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United We Stand........

Without allowing history to repeat itself, we must draw lessons from history and bear in mind that like in the past vested interests will never give up their efforts to destabilize our nation through intrigue. For them creating dissent is by far the most successful way to achieve their goal. Therefore the political leaders of the government and the opposition together with the military leaders of this country must realize that united we will be able to defeat such disruptive forces powered by vested interests and that divided we will fall prey to their designs.